On Banning Bitcoin

I write today to express my concerns about Bitcoin. This virtual currency is currently unregulated and has allowed users to participate in illicit activity, while also being highly unstable and disruptive to our economy. For the reasons outlined below, I urge regulators to take appropriate action to limit the abilities of this highly unstable currency.

The very features that make Bitcoin attractive to some also attract criminals who are able to disguise their actions from law enforcement. Anonymity combined with Bitcoin’s ability to finalize transactions quickly, makes it very difficult, if not impossible, to reverse fraudulent transactions.

In addition, its deflationary trends ensure that only speculators…will benefit from possessing the virtual currency…This flaw makes Bitcoin’s value to the U.S. economy suspect, if not outright detrimental…There is no doubt average American consumers stand to lose by transacting in Bitcoin.

The clear ends of Bitcoin for either transacting in illegal goods and services or speculative gambling make me weary of its use…I urge the regulators to work together, act quickly, and prohibit this dangerous currency from harming hard-working Americans.

One member of the Bitcoin community has written a formal response to Senator Manchin:

I appreciate your concern for the citizens of this country, but I am afraid that you may have a deep lack of understanding of the technology underlying bitcoin…Bitcoin is a protocol, not a currency per-se. It is a way to transmit information over the Internet and that information can represent ‘value’ if the sender chooses to treat it that way…This protocol cannot be un-invented. It has already been copied thousands of times and is replicated all over the world in multiple forms. Banning bitcoin [would be] like trying to ban e-mail. [It actually could not] be shut down without shutting down the Internet itself….Bitcoin is already being regulated by the US government. All exchanges which convert bitcoins into US dollars and back [operate under] regulatory requirements…I implore you to become better educated about the work being done to bring this incredible technology to the world.

Another member of the Bitcoin community, parodying Senator Manchin’s letter, makes the point that that the Senator could have used the same argument to call for a ban on cash:

I write today to express my concerns about Cash. This paper currency is currently unregulated and has allowed users to participate in illicit activity, while also being highly unstable and disruptive to our economy. For the reasons outlined below, I urge regulators to take appropriate action to limit the abilities of this highly unstable currency.

By way of background, Cash is a currency that has gained notoriety in recent months due to its relation to illegal transactions…The very features that make Cash attractive to some also attract criminals who are able to disguise their actions from law enforcement…Due to Cash’s anonymity, the market has been extremely susceptible to muggers and scam artists stealing millions from Cash users. Anonymity combined with Cash’s ability to finalize transactions quickly, makes it very difficult, if not impossible, to reverse fraudulent transactions…Cash has also become a haven for individuals to buy black market items. Individuals are able to anonymously purchase items such as drugs and weapons illegally…The clear ends of Cash for either transacting in illegal goods and services or speculative gambling make me weary of its use…I urge the regulators to work together, act quickly, and prohibit this dangerous currency from harming hard-working Americans.